Bankruptcy is probably the worst thing that can happen to a business person. When filing for bankruptcy, you can do that with or without a lawyer. However, its considered bad practice to chose the latter option, and we’re going to tell you why.
The first and most important reason as to why is down to the fact that filing without, or filing for Chapter 13 bankruptcy, will cost you far more if you choose to go “pro per” or “pro se”.
But there are far more reasons as to why you should always get an attorney’s help when doing so. So let’s start discussing why.
1. Planning For Bankruptcy
The most important thing is to plan your bankruptcy with the help of an attorney. This is probably the best thing you can do, as the attorney can help you consider the alternatives.
Namely, the only way to achieve financial peace isn’t through filing for bankruptcy. There are alternatives out there which you and your attorney can discuss about.
When doing so, you can choose either Chapter 7 or Chapter 13, but both do completely opposite things. Chapter 7 will indeed wipe your entire debt, but you will lose some possession, such as your home, in the process. This happens only if you’re late on your payments, so the house will be taken as collateral. On the other hand, Chapter 13 is a reorganization plan that only the individual can file. This bankruptcy plan is only viable if you have some income and wish to pay back some of the debt through a reorganized repayment plan.
With the help of an attorney, you can file for the most suitable plan based on his recommendation after taking a look at your situation.
2. Prepare You For Bankruptcy
As soon as the attorney would’ve taken a look at your situation, he would have you take the “means test”. The “means test” is taken by the individual filing for bankruptcy to determine whether he can qualify for eighter Chapter 7 or Chapter 13 plan.
The next preparation step is to evaluate your property and everything else you own. A bankruptcy attorney will know how to realistically evaluate all of your assets, so don’t expect any favors.
However, one thing that your lawyer will help you as much as he can with is the exemption system. The exemption system is a system for keeping a property in the case of filing for bankruptcy. Every state in the U.S. has a different exemption system and your lawyer will know exactly how to assist and protect your assets as much he can in the case.
The 4th step of your preparation comes in the form of discharging of debts. Namely, not all of your debts get wiped out, and others only if certain criteria are met. Your lawyer knows the ins and outs of the system, so he can explain to you what this means, which debts can get eliminated, and which will stick to your case.
As suggested by bankruptcy attorneys from Trust WT, in 2018, 9.2% of all Chapter 7 filing, and 8.5% of all Chapter 13 filings were done “pro per” (without a lawyer). You’d be surprised to find out that only 2% in both Chapters managed to get a repayment plan. That’s a 98% lose rate going without a lawyer, so why should you go without one? The rest of the cases that filed with a lawyer saw nearly 70% of them getting a repayment plan. Always contact a bankruptcy attorney for filing both Chapter 7 and Chapter 13.
3. Help You During Bankruptcy
It’s safe to say that once you file for bankruptcy, things won’t get better for a short time. Under penalty of perjury, you will be asked to file financial paperwork and data of everything you own. This goes from debts to income, to assets, to transactions.
If you choose to hire a lawyer for your case, he will know what you can and cannot disclose. He also knows the value of your assets, what considers and constitutes income, which of your assets can and should not be given to pay off the debt, as well as a host of other issues that he has expert knowledge in.
His expertise is not only valuable to you but indispensable as it is the only support you have in your case. We mentioned about preparations and planning, and your attorney will know exactly how to plan and prepare you for the hard times ahead. Furthermore, your lawyer will guide you through the entire bankruptcy case, the judge, the trustees and everything else.
Once everything goes into motion, you will be taken before a judge and ask to swear to tell the truth. You will also have a meeting with the creditors and asked to speak nothing but the truth as well. During these two processes, your lawyer will be there to guide you through. Everything you say will be backed up by your attorney, and he will testify in your defense.
However, probably the single most important reason why you should have a lawyer by your side is when dealing with creditors. Namely, creditors don’t know when to end, and some of them might continue taking assets that violate your lawyer’s automatic stay. If this happens, your lawyer will have the power to demand compliance and even ask the court to hold the creditor in question under the circumstances in play.
4. Negotiate the Deal
In most bankruptcy cases, the defendant can negotiate a deal with the creditors. We mentioned Chapter 7 and Chapter 13 earlier. Well, in Chapter 7, your lawyer will negotiate a deal in place with your creditors, which will allow you to keep your house and even a car. In the other case, Chapter 13, your attorney will negotiate the terms of your repayment with the creditors. Both Chapters are very complicated and require experts to run the entire ordeal.
If you choose to without help, then you will fail miserably in most cases. So do not neglect the importance of a bankruptcy attorney.